Policy News Update

The scope and structure of the "Gulf Coast Restoration Plan" that President Obama proposed in his Oval Office address Tuesday night are still unknown, but senior administration officials say it will go far beyond mopping up crude on beaches and marshes. The plan, they say, will seek to reverse a century's worth of damage caused by oil and gas production, the straitjacketing of the Mississippi River with levee walls, and Hurricanes Katrina and Rita.

Experts say the plan could resemble and yet dwarf the world's largest environmental restoration project underway: the Everglades project. That plan, which Congress approved in 2000, is now expected to cost $12.5 billion.

Like the Everglades, drained to half their original size and polluted by sprawling suburbs and sugar farms, the Gulf Coast has suffered at the hands of ambitious efforts to tame the landscape.

The delta once scoured itself with the help of the Mississippi River, which regularly shifted paths, evenly scattering its sediments across marshes that serve as nurseries for marine life and protect against hurricanes. But decades of dredging and dam-building have deepened the river and created a chute that sends sediments off to the deep waters of the Gulf of Mexico, eroding coastal marshes at the rate of a football field every 45 minutes.

Meanwhile, the region has become home to a third of U.S. oil and gas production and half of its refining capacity.

Administration officials say the work of a federal interagency task force charged with Gulf Coast restoration, which in March released a "Roadmap for Restoring Ecosystem Resiliency and Sustainability," will guide the restoration effort.

A big part of the restoration challenge will be combining under one umbrella the various state and federal efforts already underway along the Gulf Coast, including five federal programs launched between 1990 and 2007.

GULF: PROBING THE LIMITS OF OIL-SPILL LAW

Under the Oil Pollution Act of 1990, passed after the Exxon Valdez spill, a council of trustees is charged with carrying out a natural resources damage assessment that includes determining the appropriate scale of restoration.

The incident command system, headed by the Coast Guard, and the trustee council, comprising state, federal and tribal officials, are charged with making claims of the responsible company, in this case BP PLC, whose damaged well is spewing oil into the Gulf.

But just how much can be claimed for longer-term restoration, given the little-understood scope and extent of the ongoing oil spill and the decades of abuse to the Gulf Coast, remains a key question, according to one senior administration official.

A task force may be the solution, similar to the one that oversees the Everglades restoration effort, a project whose costs are split 50-50 between the state and federal government and that is managed by the Army Corps of Engineers and the South Florida Water Management District, an existing state agency.

"In order to take those moneys and spend them in a more holistic way, it may take some legislation and certainly the formation of an interagency, Everglades-restoration-like coordinated team," said Lynn Scarlett, a former deputy secretary of the Interior.

Scarlett could not speculate on an exact dollar figure that would be asked of BP but noted that the Exxon Valdez spill settlement would be $14 billion in today's dollars.

"There's no serious number at this point. The only thing that can be said at this point is that it likely will be very big," she said. "This is clearly larger than Exxon Valdez. Several times larger, and it's not even over."

GULF SPILL: OIL CONTAINMENT PROGRESSES BUT FAR FROM COMPLETE

Coast Guard Admiral Thad Allen told reporters that the recent addition of a new oil rig, the Q4000, would bring the oil capture capacity to 28,000 barrels per day by next week and between 60,000 and 80,000 barrels per day by mid- or late July. Despite the recent progress made in drilling the relief well -- seen by BP and the government as the best permanent fix for the ongoing crisis -- Allen declined to adjust his past target of a mid-August completion date.

Allen has begun a national inventory of skimming equipment in order to help meet local shoreline containment needs, which have become a sore point for some coastal officials. There are now a greater number of "vessels of opportunity," the fishing boats and other craft offering to help with spill cleanup, than there are vessels in the Coast Guard itself.

With oil continuing to spread throughout the Gulf, the National Oceanic and Atmospheric Administration expanded the area of federal waters it has closed to fishing. The closed area now extends to Panama City Beach, Florida, and represents more than 80,800 square miles, or a third of the Gulf's federally managed area.

ESA GULF OIL SPILL DATA REGISTRY

In an effort to assist scientists and natural resource managers in the Gulf region, the Ecological Society of America (ESA) has set up a data registry (http://www.esa.org/mdc). ESA is encouraging its membership to contribute data to the registry regarding conditions of affected ecosystems prior to the accident. The database will be searchable by location and time, taxa or physico-chemical variables, ecosystem type, etc. The intent is to offer data that will be helpful to scientists and managers on the front line of assessment, mitigation, and restoration efforts.

BUDGET: SENATE GRIDLOCKED ON JOBLESS BENEFITS AND MEDICARE

Late this week, frustrated Senate Democrats were threatening to pull from the floor their scaled-back economic relief bill which would address both benefits for the jobless jobless benefits and Medicare concerns. A much slimmer Republican alternative was earlier defeated 57-41 with all but one Democrat voting against the measure because of the extent of the cuts.

The continued impasse will affect an estimated 900,000 unemployed workers by this weekend, and, after holding back for two weeks, Medicare’s administrators face a Friday deadline to begin enforcing a 21-percent cut in physician payments that technically took effect June 1.

Tensions came to a head Thursday night after Majority Leader Harry Reid (D-NV) failed again on a 56-40 roll call to cut off debate.

The margin was closer than it appeared: Senator Robert Byrd (D-WV) was absent and Reid said Senator Joseph Lieberman (I-CT) had promised to be a 60th vote if needed. But getting across that line is impossible without Republican support and further compromise on Medicaid spending—something Reid himself is reluctant to do.

Within the leadership, there is pressure now to pull the bill from the floor until after the July 4th recess.

Across the Capitol in the House, a parallel budget fight bedevils Democrats and the White House.

Caught in the middle is President Barack Obama’s request for $33 billion in new war funding for operations in Afghanistan. The Senate has already approved the emergency defense appropriations, but House action has stalled as the administration and Democrats try to come up with spending offsets to pay for new state aid to avert threatened layoffs of public school teachers this fall.

Reid is clearly near 60 votes, but a deal with two Maine Republicans — Sens. Olympia Snowe and Susan Collins — is elusive both because of their political fears and his own reluctance to trim back a $24 billion package of Medicaid assistance important to cash-strapped Nevada. Reid’s tough re-election campaign at home is part of the equation. And one question now is how big a factor it will become in shaping legislative strategy on the large bill.

At the same time, there’s no question the new anti-deficit political climate is forcing Democrats to rethink their own demands and the scale of state assistance the federal government can afford.

Just as the Medicaid funds may have to be scaled back, Obey has already cut in half a $23 billion teacher’s aid package and is pressing the White House to help come up with ideas to sell this to a deficit-conscious Congress.

CLIMATE: OUTLOOK FOR CARBON LIMITS GETS BLEAKER

Senate Democrats may have emerged from their caucus meeting without a clear plan for this summer's energy bill, but they appear to agree on one point: Cap and trade doesn't have the votes.

Several senators say the chamber is unlikely to pass a measure that sets a price on carbon emissions this year, despite President Obama's support for such an approach and a push from many Democrats who say pricing carbon is needed to stop the adverse effects of climate change.

Senator Bernie Sanders (I-VT), an ardent supporter of setting carbon limits, said he does not think the Senate can get 60 votes this year on a "strong" climate bill.

"For a variety of reasons, with virtually no Republicans supporting us, it would mean that every Democrat has to step up to the plate," Sanders said yesterday. "Do I think we have 60 votes to come up with strong global warming legislation? No. I think that's a tragedy, but that's the way it is."

Senator Byron Dorgan (D-ND) said he does not think there are 60 votes in the Senate for a cap-and-trade bill like the American Power Act advanced by Sens. John Kerry (D-MA) and Joe Lieberman (I-CT), which would cap greenhouse gas emissions across multiple sectors of the economy.

"There's a better chance of having 60 votes with a straight energy bill," said Sen. Ben Nelson (D-NE). And Sen. Kent Conrad (D-ND) said he has always thought cap and trade "was a long shot this year, given all the other things that are before Congress -- the short nature of the session and because of the election."

It is unclear whether Obama and Senate Democratic leaders intend to push aggressively for cap and trade or any mechanism to price carbon this year. Obama failed to call for it directly in his Oval Office address this week and Senate Majority Leader Harry Reid (D-NV) has declined to promise to include a price on carbon in an energy package slated for floor debate next month.

Reid said that his goals for energy legislation are dealing with the crisis in the Gulf of Mexico, creating jobs and cutting pollution.

Reid said he would work with committee leaders to come up with a bill that sets "reasonable goals with a reasonable timeframe" and will "overcome whatever hurdles opponents put in our way." But he would not say whether that bill would include a price on carbon.

Commerce Chairman Jay Rockefeller (D-WV) said in a recent statement, "the Senate should be focusing on the immediate issues before us -- to suspend EPA action on greenhouse gas emissions, push clean coal technologies, and tackle the Gulf oil spill.”

Despite the pessimism, supporters of a cap-and-trade approach say the discussion is not over.

"I don't believe it's not politically possible yet, and we're just going to keep working ahead to see where we're at," Kerry said yesterday. Kerry also eschewed the term "cap and trade," calling the mechanism in his bill a "pollution target."

Kerry co-sponsor Sen. Joe Lieberman (I-CT) said he believes that "a majority of members of the Democratic caucus believe that we're not going to be able to achieve what we want -- which is a strong energy independence bill that creates millions of jobs -- without putting a price on carbon." He said yesterday's Democratic caucus meeting marked "the beginning of a real focus by the caucus on the issue of energy independence, and we'll keep talking about it."

Democrats hope that another caucus meeting slated for next week will help push them closer to a consensus about how to proceed.

Energy and Natural Resources Chairman Jeff Bingaman (D-NM) said yesterday's meeting was a presentation of various Senate energy bills. "So it wasn't a chance for people to really interact." He said he hopes they will get that chance at the meeting next week.

"Sooner or later, hopefully sooner, people will come together and come up with a comprehensive plan," said Sen. Carl Levin (D-MI). "There's a lot of hurdles to be jumped."

CLIMATE: AUTOMAKERS BLAST LUGAR’S ENERGY-EFFICIENCY BILL

Automobile manufacturers declared their opposition to a Senate bill that would require the government to set long-term fuel efficiency standards for motor vehicles, saying the measure would add costly new mandates and undermine new fuel economy standards.

The Alliance of Automobile Manufacturers said a bill introduced earlier this month by Senator Richard Lugar (R-IN) "fails to provide an appropriate framework for pursuing efficiency in the light duty transportation sector."

The bill from Lugar and his co-sponsors Sens. Lindsey Graham (R-SC) and Lisa Murkowski (R-AK) would promote energy efficiency and more nuclear power in addition to stronger fuel economy standards but would not mandate carbon dioxide emission cuts.

Proponents have pitched the bill as a less aggressive approach than a Senate cap-and-trade energy and climate bill that still yields reductions in greenhouse gases while reducing U.S. demand for oil. Lugar recently spoke with President Obama about the prospects for including his measure as part of a broad Senate energy and climate package.

The automakers said the bill would delay fuel economy and greenhouse gas standards set in April by the U.S. Environmental Protection Agency and the Transportation Department by changing the rules after the process has started.

The group also criticized the bill's "fuel efficiency performance" program, which Lugar's office says will reward the purchase of the most efficient vehicles with a rebate offset by a fee on the least efficient vehicles.

But the automakers say it will use taxpayer money to reward some drivers for buying "vehicles big government likes," while increasing taxes on drivers who depend on heavy duty vehicles or features like four-wheel drive and towing capacity.

INTERIOR: FORMER SECRETARY BABBITT CRITIZES DEPARTMENT

The Interior Department is under attack from a former department chief and from a coalition of animal rights groups.

Bruce Babbitt, Interior secretary in the Clinton administration, said Interior's Minerals Management Service (MMS) lacks the tools to provide adequate environmental oversight of offshore oil and gas operations and that the job should instead fall to the U.S. Environmental Protection Agency (EPA).

"The Interior Department can supervise collecting the money and giving the licenses but we need an absolutely independent regulator, and I think EPA is the logical choice," Babbitt said Sunday on the television program Platts Energy Week.

Babbitt said the industry has "essentially been self-regulating" for years, across both Democratic and Republican administrations but that the more serious problems did not take hold until President George W. Bush took office.

Meanwhile, a coalition of animal rights groups sent a letter early this week, saying that Salazar has failed to reform that corruption and calling for his termination.

MMS is under fire for having cozy relationships with industry and for approving offshore drilling operations -- including BP PLC's exploration plan for the area where oil is now gushing into the Gulf -- by way of a "categorical exclusion," a streamlined environmental review intended to be applied only to routine projects.

Last month, Interior Secretary Ken Salazar ordered a massive overhaul of MMS, breaking the agency into three separate offices responsible for issuing permits of offshore drilling, collecting revenue from those operations and enforcing safety regulations.

Along with the creation of a body within MMS dedicated exclusively to inspecting energy operations, Salazar is asking Congress to boost funding for the inspections.

The Interior chief is also asking Congress to triple its 30-day window for MMS to respond to exploration plans submitted by oil and gas companies, saying that a 90-day review period would provide time for additional environmental and safety reviews.

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